Open Access Repository

Princelings and Paupers? State Employment and
the Distribution of Human Capital Investments Among
Households in Viet Nam. Asian Development Review. Vol. 30(2), pp. 26–48

Coxhead, Ian; Phan, Diep | August 2013

Abstract

Inequality in access to education is known to be a key driver of income inequality in developing countries. Viet Nam, a transitional economy, exhibits significant segmentation in the market for skilled labor based on more remunerative employment in government and state firms. We ask whether this segmentation is also reflected in human capital investments at the household level. We find that
households whose heads hold state jobs keep their children in school longer, spend more on education, and are more likely to enroll their children in tertiary institutions relative to households whose heads hold nonstate jobs. The estimates are robust to a wide range of household and individual controls. Over time, disparities in educational investments based on differential access to jobs that reward skills and/or credentials help widen existing income and earnings
gaps between well-connected “princelings” and the rest of the labor market. Capital market policies that create segmentation in the market for skills also crowd out investment in private sector firms, further reducing incentives for human capital deepening.

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ADB Review reports on development news from Asia and the Pacific and on the activities of the Asian Development Bank, which publishes the magazine six times a year. Opinions and materials in ADB Review do not necessarily reflect the official views of ADB.

ADB Review reports on development news from Asia and the Pacific and on the activities of the Asian Development Bank, which publishes the magazine six times a year. Opinions and materials in ADB Review do not necessarily reflect the official views of ADB.